Buhari's government set to hand over debts in excess of $100bn to incoming Tinubu administration

PRESIDENT Muhammadu Buhari's administration is set to pass on a N46.25trn ($100.63bn) debt burden to the incoming Tinubu government when it hands over power on May 29 according to figures just released by the Debt Management Office (DMO).

Next month, the Buhari administration, which was been in power since 2015,  is due to bow out of office. During the eight years of the Buhari administration, Nigeria’s debt profile had grown to over N46trn  from N12.6trn in 2015, mainly as a result of the economic slowdown precipitated by the coronavirus pandemic.

Despite the anxiety caused by the heavy existing debt burden, the government said it had received approval from the World Bank on another N369bn loan ahead of the fuel subsidy removal in June 2023. Of late, the  situation has continued to raise fiscal worries, especially as the International Monetary Fund (IMF), said Nigeria almost emptied its treasury on debt servicing in 2022.

Just to pit the matter into perspective, the Federal Inland Revenue said it collected N10trn in revenue in 2022, with a 2023 budget expenditure of N21.83trn, meaning the treasury has a deficit of N11.34trn. Economic experts believe fixing Nigeria’s debt-burdened economy would be a hard nut to crack for the incoming Tinubu administration.

Professor Bongo Adi, an economics lecturer at Lagos Business School said the debt incurred by President Buhari’s government has mortgaged the future of the country through heavy obligations. He suggested that the only viable option is for the incoming administration to seek loan renegotiation, as it is the practice internationally, provided the government has credibility.

“With such a colossal debt burden without apparent means of repayment, the already unsustainable debt profile undermines fiscal sustainability, no matter what the next government will do. There is another borrowing spree of $800m from the Word Bank without how to pay back.

“They are taking advantage of borrowing to share among themselves as they want to exit because they know that nobody would hold them to account. There is nothing else to talk about as Nigeria is broke. The coming days are not going to be nice at all because if you look on the horizon with this kind of debt, we are not bleeding only from the financial side but from everywhere.

“Medical doctors and professionals of all cadres are leaving, so who will create the money to pay back the loans? The factors that drive economic activities are fast depleting, so when they go on accumulating loans, they endanger the lives of everybody.

"Based on the way it is, today’s situation is better than what we will see in the incoming days. They are handing over a dead economy to Tinubu and I don’t know which magic he would perform," Professor Adi said.

Dr Ayo Teriba, the chief executive of the Economic Associates, said the error of President Buhari’s government was not to transition from income-based debt management into an asset-based debt management model. He disclosed that to ensure sustainability, the incoming government must learn from the mistake of Buhari’s government by borrowing against assets, not income.

He said this was what Brazil and India did that attracted foreign direct investment into their countries. Dr Teriba called on Nigerians to support the call for the incoming government to focus on equity financing rather than debt to grow the economy.